Wyoming eyes a 10x surge in electricity demand Image By EPN staff Wyoming will host a data center that could end up using 10 times as much energy as the state spends to power the homes of its half a million residents. Energy infrastructure company Tallgrass and artificial intelligence (AI) data center developer Crusoe have teamed up to build a data center that would initially use 1.8 gigawatts (GW) of electricity, with the potential to use 10 GW. Wyoming is among a growing number of states working to balance the benefits of large data centers on job creation, economic development and tax revenue with their demands for land, energy and water. Why it matters AI and cloud storage require considerably more power than traditional data centers. Several Microsoft data centers have been located in Cheyenne since 2012, but the new $800 million Meta Platforms site, which is near completion, will require significantly more power. Wyoming is the third largest net energy supplier in the country, according to the U.S. Energy Information Administration. The state exports the majority, nearly three-fifths, of electricity it produces. Company officials told the AP that the data center will depend on its own energy supply from natural gas and renewable sources. The bigger picture Energy use for data centers is on the rise. Last year, the Lawrence Berkeley National Laboratory released a study that found data centers consumed 4.4% of U.S. electricity in 2023 and predicted that amount to rise 6.7% to 12% by 2028. States and the federal government are facing the energy challenge in different ways. The Trump Administration is encouraging data center operators to work with power providers on federal land. In late July, the U.S. Department of Energy announced the agency had selected four sites—Idaho National Laboratory, Oak Ridge Reservation, Paducah Gaseous Diffusion Plant and Savannah River Site—to work with private sector partners on the development of AI data centers and significant energy production projects. States weigh the costs of producing new power with the possibility of greater economic output. A study by Virginia’s Joint Legislative Audit and Review Commission found that although data centers are paying their share of electricity costs, growing demand will likely increase ratepayer rates in the future because utility companies will need to build new infrastructure. The data center industry contributes $5.5 billion in labor income, $9.1 billion in gross domestic product and 74,000 jobs to the state’s economy each year. The West Virginia legislature approved legislation to better enable data centers to purchase power from standalone power plants which would be free of local zoning and electricity rate rules. In Louisiana, Meta, the parent company of social media platforms Facebook, Instagram and WhatsApp, is building the largest data center in the Western Hemisphere. The $10 billion hub will exist on a 2,250 acre site that will use twice as much electricity as New Orleans on a peak day. Power company Entergy will build three new natural gas plants and Meta will add 1,500 megawatts of new renewable energy to the grid according to Louisiana’s economic development agency. Researchers at the Environmental & Energy Law Program at Harvard Law School found that some utilities force ratepayers to subsidize data centers by providing such centers with discounted rates. Additional details The Environmental and Energy Study Institute found large data centers can use up to 5 million gallons of water per day to cool their operations. For data centers located in the west, the impact on water supplies could be significant. Some question whether the impact to electrical grids, water, and sales tax revenue is worth the additional jobs and economic output. A CNBC investigation found that 16 states offered data centers $6 billion in sales tax exemptions on building materials and equipment in the past five years. Critics of tax incentives point to the fact that while data centers create jobs for construction, once open they provide relatively few jobs. Two thirds of states provide tax exemptions on materials needed to build and equip data centers. The Michigan legislature approved such a tax incentive plan but required recipients to pay for their own electricity and meet energy efficiency standards.
